Thursday, October 04, 2012

Will crowdfunding solar projects work?

Sylvie Barak

10/3/2012 6:41 PM EDT

It’s an Indian summer here in San Francisco, so what better time for some good news about solar energy?

Mosaic, an online marketplace connecting investors to solar projects, announced it has come up with funding for its 6th large solar project in rather unusual fashion… by crowdsourcing it, Kickstarter style.

Mosaic’s latest project, a 47 kW solar installation on the roof of the Youth Employment Partnership (YEP) in Oakland was funded in less than a week by members of the general public donating micro amounts through the click of a mouse button.

The concept may sound novel, but it is not new.

Crowdfunding site Kickstarter launched in April, 2009,  revolutionizing investment, turning the internet into an online hub for raising money in small increments from the general public in support of a cause, product or project. Suddenly, backing startups wasn’t just for VCs, it was for everyman (and woman).

Kickstarter’s business grew rapidly from inception. In 2010 the website had 3,910 successful projects, $27,638,318 pledged, and a project success rate of 43 percent. In 2011, the corresponding figures were 11,836, $99,344,381 and 46 percent. The success spawned a string of copycats, the latest of which is Mosaic with its mass funded solar projects.

The success of opening the investment up to the online masses surprised even Mosaic itself.

“The speed at which we were able raise the $40k to fully fund the YEP project gives us hope that our new model will grow into a significant source of solar financing while offering great returns for investors,” said Mosaic’s President Billy Parish.

During Mosaic's first phase, hundreds of people invested more than $350,000 at zero-interest to finance five rooftop solar power plants in California and Arizona.

All of the first five projects went online and Mosaic said some investors had already received back the full amount they put in.

The beneficiaries of these early projects included People’s Grocery, a food justice organization in Oakland, CA and 18,000 homes without electricity on the Navajo Reservation in Arizona.

The solar installations are predicted to save community organizations over $600,000 on utility bills, which is nothing to sniff at.

To make its effort more long term, Mosaic has also submitted an application to the Securities and Exchange Commission (SEC) to offer Solar Power Notes to the public, with those proceeds going to fund other solar projects.

The firm said thousands of people have signed up to be notified when that initiative launches.

Currently, around 25 percent of the price of solar installations comes down to financing and customer acquisition costs, or soft costs. By crowdfunding a project, Mosaic says it can reduce these soft costs while enabling millions of Americans to own a piece of the clean energy economy.

“Our mission is to create shared prosperity through clean energy” said Mosaic’s CEO Dan Rosen. “We see a huge opportunity in transitioning our world to clean energy, and we want to make it possible for people and communities to prosper and be a part of this massive transformation.”

Combined, Mosaic’s first five projects are said to have created 73kW of solar energy and produced over 2,700 job hours for local laborers.

The firm was also recently awarded $2M from the U.S. Department of Energy and raised another $3.4M from venture capitalists to bring its clean energy marketplace to scale.

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